Delhi District Court
M/S Bravo Action Security Services vs Employees State Insurance Corporation on 26 March, 2022
IN THE COURT OF SENIOR CIVIL JUDGE CUM RENT
CONTROLLER (WEST), TIS HAZARI COURTS, DELHI
Presided by : Ms. Susheel Bala Dagar
ESIC No. 4/16
CNR Number: DLWT030001682013
In the matter of:
1. M/s Bravo Action Security Services
118, Tulsi Ram Bhawan, Near Old SBM Premises,
Najafgarh Road, New Delhi110015.
Through Shri Vinit Tiwari, its proprietor
2. Shri Vinit Tiwari, Proprietor
118, Tulsi Ram Bhawan, Near Old SBM Premises,
Najafgarh Road, New Delhi110015. .........Petitioners
Versus
Employees State Insurance Corporation
Rajendra Bhawan, Rajendra Place,
New Delhi. ....... Respondent
Date of filing of the petition : 23.09.2013
Date of reserving judgment : 08.03.2022
Date of pronouncement : 26.03.2022
JUDGMENT
1. This is a petition under Section 75 of the ESIC Act filed by the petitioner against the respondent for setting aside order dated 14.08.2013 passed under Section 45A of ESI Act assessing Rs. 9,68,178/ as contribution from 4/2008 to 12/2012.
2. Brief facts of the case as per the petition are that the petitioner no. 1 is a proprietary firm and covered as an establishment under ESI Act and petitioner no. 2 is the proprietor of the petitioner no. 1. The petitioners are ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC Page No. 1 of 28 Digitally signed by SUSHEEL SUSHEEL BALA BALA DAGAR Date: 2022.03.26 DAGAR 18:08:22 +0530 engaged in supplying manpower to various establishments and private persons (individuals). The petitioners have also employed administrative and supervisory staff. The insurance inspector of the respondent corporation in the past inspected the records of the petitioner establishment. Complete compliance by the petitioner with the ESI Scheme and the Act was found in the said inspections by the concerned insurance inspectors of the respondent corporation.
3. On 20.02.2013 two SSO's of the respondent corporation visited the petitioner establishment and made inspection of the records for April 2008 to March 2012 vide inspection note annexureA3 and observation slip annexureA4. The respondent had issued amended / modified instructions dated 14.03.2012 for inspection. The aforesaid inspection of 20.02.2013, is in violation of the aforesaid instructions and the said instructions are annexed as Annexure A2.
4. The Assistant Director of the respondent corporation issued C18 dated 03.04.2013 alleging that the petitioner is liable to pay Rs. 9,68,178/ as contribution on the basis of inspection report dated 20.02.2013. Copy of the C18 is annexed as Annexure A5. The show cause notice was not accompanied with the copy of inspection report dated 20.02.2013. Thereafter, order dated 14.08.2013 was passed by the Assistant Director under Section 45A of the ESI Act determining Rs. 9,68,178/ as contribution for the period from April 2008 to December 2012. The said order is annexed as Annexure A6.
5. It is submitted that the petitioners have since coverage of the ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC Page No. 2 of 28 Digitally signed SUSHEEL by SUSHEEL BALA DAGAR BALA Date:
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establishment been submitting the periodical half yearly returns including the period of April 2008 to September 2011 to the respondent signifying compliance with the ESI Act relating to employees. For the period October 2011 upto March 2012 the respondent corporation has directed all the covered employers/ establishments to make online compliance under the Act including preparation of online monthly challans and the said monthly challan from October 2011 onwards were/ are online compliance with respect to monthly payments as well as half yearly returns.
6. The returns submitted by the petitioner contained particulars as per the prescribed format, which fact is evident from the copies of returns annexed. As such the respondent corporation from 2008 was periodically made aware vide the statutory returns that the petitioners have employees whose monthly wages exceed the ESI ceiling and that position was never questioned and as such accepted. In the year 2013, the respondent has no legal right to arrive at conclusion that the monthly wages of all the employees employed by the petitioner remains within the ceiling limit. Copies of the ESI returns for the period April 2008 to September 2011 are annexed as Annexure A7. These returns were inspected by the SSOs alongwith statutory register no. 32 during the above mentioned inspection. Photo copies of the above said register prescribed under regulation 32 are attached as Annexure A8.
7. The observations of the SSOs dated 20.02.2013 are patently vague and fails to point out understandable irregularities and illegalities. In the present case there was complete compliance with Section 44(1) of ESI Act ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC Page No. 3 of 28 Digitally signed SUSHEEL by SUSHEEL BALA BALA DAGAR Date: 2022.03.26 DAGAR 18:08:40 +0530 as the returns envisaged under the said provisions are not only submitted to the respondent but same for the period involved in the inspection were duly submitted to and inspected by the SSOs. There was also complete compliance with Section 44(3) of ESI Act as regulation 32 register of employees has been maintained for the period 200809 to 201112 and was also submitted to and inspected by the SSOs in their inspection dated 20.02.2013. As such the preconditions for invoking the provisions of Section 45A are completely lacking in the present case. Every amount figuring in the account books of the petitioner establishment can not be subjected to levying or demand of contribution by the respondent corporation. The observation slip dated 20.02.2013 neither empowers the official of the respondent to invoke Section 45A nor the subsequent C18 dated 03.04.2013 gives any sanctity for invoking Section 45A. No explanation was sought by Section 45A authority about the allegation that there was any admission on 26.02.2013 by undisclosed employees representative in the observation sheet that omitted wages were found by the SSOs on conducting the inspection. The petitioner neither on 06.05.2013 nor in between 06.05.2013 to 17.05.2013 was made aware that Section 45A Authority had found signature of some employees differing from month to month. The Authority has no power to direct production of any document or document which is not required to be maintained under the provisions of ESI Act. The SSOs and the Section 45A Authority failed to notice and consider the facts existing on record including returns, regulation 32 register etc. ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC Page No. 4 of 28 Digitally signed by SUSHEEL SUSHEEL BALA DAGAR BALA Date:
2022.03.26 DAGAR 18:08:44 +0530
8. The proprietor who had studied upto high school was unable the comprehend the legal implications of the subject of inspection, show cause notice and subject matter involved therein, was dependent upon ESI record maintainer and said record maintainer instead of guiding the proprietor properly, asked R.K. Singh (who was also not well educated) an employee to appear and he appeared without any legal authorization. The show cause notice as well as the impugned order nowhere allege or establish that the supplied manpower to whom payment of Rs. 1,47,05,807/ was made by the petitioners, was actually supplied to establishment covered under ESI Act and the work of supplied manpower falls within any of the four categories mentioned in Section 2(9) of the ESI Act.
9. Petitioners have neither employed security guards and security supervisors etc. or any other man power on the premises of establishment of the petitioners nor the establishment of the petitioners required employment/ deployment of any such man power. The petitioners employed administrative staff in their establishment. The petitioners since its set up till date have been engaged exclusively in the activity of supplying man power to others. The petitioners are neither manufacturer of any material goods nor prepare and supply any material service. The man power to whom the alleged amount was paid are uncovered employees and that manpower had been supplied to others and not employed in or in connection with the work of establishment of the petitioners.
10. The petitioners have made the respondent aware about the number of employees employed by the petitioners and supplied to others were getting ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC Page No. 5 of 28 Digitally signed by SUSHEEL SUSHEEL BALA DAGAR BALA Date:
2022.03.26 DAGAR 18:08:49 +0530 wages/ salary exceeding ESIC wages ceiling. There has been no dispute or challenge by the respondent to the above mentioned records and facts stated therein. The accountancy charges of 60,000/ per annum figuring in the observation slip can not be subjected to contribution. The accounting charges paid by the petitioner are payment made to a professional doing part time accounting work of large number of clients including the petitioners and his monthly earning exceeds the wages ceiling. Even otherwise the said payment is not wages as defined in the Act. There was no contract of employment between the said professional and the petitioners.
11. It is submitted that the ESI Act virtually setup a statutory insurance scheme for health care benefits. When no such services are rendered by the respondent to the number of persons who are not employees on account of monthly payment of more than the ceiling limit and whose services were engaged by private persons through the petitioners, the respondent has no right to claim and recover ESI contribution in relation to them for the period April 2008 to March 2012. Section 45A of the ESI Act can not be used to roving and fishing enquiry. Liabilities can not be saddled upon the establishments in the name of compliance of law without identification of the entitled employees. The respondent could have no basis to attribute any failure for the deposit of ESI Contribution to the petitioner in relation to the demand in question. The alleged C18 (show cause notice) and the impugned order are absolutely vague, unspecific and non speaking and violates principles of natural justice and provisions of Section 45A. Hence, ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC Page No. 6 of 28 Digitally signed by SUSHEEL SUSHEEL BALA DAGAR BALA Date:
2022.03.26 DAGAR 18:08:54 +0530 the present petition has been filed.
Written Statement by Respondent
12. The respondent opposed the present petition by filing a reply wherein it is averred that the petitioner has not come with clean hands and has suppressed the material facts from the Court. There is no cause of action for filing the present petition. The order under section 45A ESI Act, 1948 cannot be quashed as there is no provision under Section 75 of ESI Act, 1948. It is submitted that there was a complaint against the employer received by the respondents which was made from some of its employees working in Maharaja Hospital and they informed that 43 employees were being denied the benefits under ESI Act by the petitioner though they are working with them since 2001. As such in order to ascertain the genuineness of the complaint, verification of the records of the employer for the period from April 2008 to March 2012 was ordered. It is further submitted that no instruction was violated by ordering the said inspection.
13. It is submitted that on scrutiny of the inspection report it was found that there was substantial difference in the amount considered for payment of ESI contribution and the amount of salary and wages disbursed by the petitioner in each year. As the petitioner is engaged in the business of providing security personnel to the clients and there are enough evidence to suggest that the employees of the petitioner do not draw wages in excess of ESIC wage ceiling for coverage, contribution difference between the wages paid during each year and wages considered for payment of contribution during the year was claimed.
ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC Page No. 7 of 28 Digitally signed SUSHEEL by SUSHEEL BALA DAGAR BALA Date:
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14. The show cause notice proposing determining of contribution on the difference of wages was issued to the petitioner affording it an opportunity to make submission, if any against the proposed determination on 06.05.2013. A copy of observation sheet was handed over to the employer's representative by the SSO on conclusion of inspection conducted on 22.02.2013. The copies of the proceedings of hearing attended by employer's representative on 06.05.2013 and 17.05.2013 are annexed which clearly establish that the employer had no submission to make against the proposed determination of contribution.
15. Mere submission of half yearly periodical returns does not ensure proper compliance on the part of employer as is evident from the copy of complaint received from the petitioner's employees and result of subsequent reverification undertaken by the SSO. The petitioner during the course of personal hearing failed to submit details of designation of its employees who were drawing wages beyond the wage ceiling prescribed under ESI Act/Rules from time to time and also the places of their deployment. The inspection conducted by the SSOs were perfectly in accordance with the ESI Act.
16. The observation recorded by the SSOs were accepted by the representative of the employer by appending his signature there under without any dissenting note, proves that the petitioner had nothing to say against the said observations. The irregularities and the illegalities on the part of the petitioner in the matter of compliance under ESI Act has adequately been explained in the speaking order dated 14.08.2013. There ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC Page No. 8 of 28 Digitally signed SUSHEEL by SUSHEEL BALA DAGAR BALA Date:
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was no complete compliance on the part of the petitioner as is evident from the copy of bill dated 31.07.2013 raised by the complaint received from its own employees alleging noncoverage by the petitioner.
17. The petitioner is a supplier of security guards and there has to be some reasonableness between amount received by it against job receipts and the amount on which ESI contribution was paid. Further, Section 45A of ESI Act empowers the corporation to determine contribution on the basis of information available to it in respect of factory or establishment where reports, particulars, registers or records are not maintained in accordance with provision of Section 44 of ESI Act. In the instant case, it has been found on verification of records of the employer and the complaint received from the employees that provision of Section 44 were violated. No submission against the proposed determination has been made by the petitioner either in person or in writing and the record called for by the authorized officer before passing of order under Section 45A were simply not produced as there has been a serious allegation of non compliance against the petitioner by a certain section of its employees, the authorized officer was within its right to call for documents to satisfy himself that the compliance in respect of all employees of the petitioner has been made in accordance with the provisions of ESI Act.
18. The action under section 45A has to be resorted for the reason that the employer tried to conceal the facts about the employment of large number of employees who were denied the benefits of the provision of ESI Act by showing arbitrarily large amount paid to such employees when the ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC Page No. 9 of 28 Digitally signed SUSHEEL by SUSHEEL BALA DAGAR BALA Date:
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fact remained that no category of employee working with the employer has drawn wages beyond ESIC ceiling as is evident from the copy of bills dated 30.04.2008, 30.09.2008, 31.10.2008, 31.03.2009, 30.04.2009, 30.09.2009, 31.10.2009, 31.03.2009, 31.03.2010, 30.04.2010, 31.10.2010, 30.09.2010, 31.03.2011, 30.04.2011, 30.09.2011, 31.10.2011, 30.04.2012 and 31.07.2013 of Maharaja Aggersen Hospital.
19. It is submitted that the SSOs who conduct the inspection dated 20.02.2013 and the authority passed the order under Section 45A acted under the prudent manner in order to ensure that the petitioner does not keep any of its employees who were legally entitled to the benefits of ESI Act beyond ESI coverage by showing arbitrary large amount of wages against their name. It is submitted that the duty of SSOs as defined under Section 44(2) of ESI Act empowered him to call any record that he may consider necessary for the purpose of esquiring in to correctness of any of the particulars stated in any return referred to in Section 44 of ESI Act. Thus the contention of the petitioner that the SSO is authorized to restrict himself to verification of records envisaged under Section 44(1) and 44(3) of ESI Act is erroneous. It is further submitted that the SSO is authorized to verify any records that he consider necessary to establish that compliance under the Act has been made correctly and since this was a complaint case where thorough verification of the records were necessary to ascertain genuineness of the complaint and the SSO was duly bound to examine all pros and cons of the case and submit his report.
20. The representative who appeared for the personal hearing is the same ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC Page No. 10 of 28 Digitally signed SUSHEEL by SUSHEEL BALA DAGAR BALA Date:
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person who had attended the SSOs at the time of inspection on 20.02.2013 and appended his signature on every document attached to the inspection report under the seal of the petitioner. The notice was issued to the petitioner/employer under registered post and had delivered to the petitioners office as per the postal acknowledge received in respondent's office. The notice issued to the residential address of the petitioner has been returned undelivered though it was sent to the notified address of the proprietor as per the respondent's office record which only prove that the petitioner did not provide its correct address and chose to ignore the communication issued by respondent's office by not taking delivery of it from the postal authority.
21. The contention of the petitioner and its employees deployed in uncovered establishment are not covered is erroneous. Since the petitioner being the principal employer of a covered unit, directly employed all such persons employed by him fall within the ambit of definition of employees under Section 2(9) of ESI Act. The petitioner has miserably failed to establish that any category of employees employed by him were in receipt of wages beyond ESIC prescribed wages ceiling from time to time. The present case is the case of investigation of a complaint, records that were consider necessary by SSO to establish that provision of the Act have been properly complied with were to be verified. No record has been shown by the employer either to the SSO or to the officer who had given the personal hearing that the accounting charges were paid to a professional who was otherwise not coverable under the ESI Act.
ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC Page No. 11 of 28 Digitally signed SUSHEEL by SUSHEEL BALA DAGAR BALA Date: DAGAR 2022.03.26 18:09:18 +0530
22. The petitioner is expected to cover all its employees falling with the wage ceiling irrespective of the facts whether they were in need of any benefits provided under the provision of the Act. It is submitted that by keeping many of its employees uncovered, the petitioner has violated the provisions of the Act besides denying his employees the benefits that were otherwise admissible to them. In present case there has been complaint that the petitioner was denying the benefits available under the Act of its employees by keeping them uncovered which has been found to be substantially proved by verification of petitioner's records and also the bill raised by the petitioner on Maharaja Agarsen Hospital. A list of such employees who were not covered is available in the complaint and also in the list provided by Maharaja Agarsen Hospital. The petitioner though claiming ESI contribution in respect of all such employees from his clients are not depositing it with the corporation.
23. List of employees for whom ESI contribution collected from the clients but not deposited with corporation is as under:
Month/year Name and Ins. No. Contribution Contribution claimed from deposited to client ESIC July,2013 Shivaji Sharma 28 0 1112472092 Brij Kishore Pathak 19 0 1114038172 Pawan 28 0 1113667759 Tribhuwan Tiwari 28 0 ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC Page No. 12 of 28 Digitally signed SUSHEEL by SUSHEEL BALA DAGAR BALA Date:
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1114038183
Replication
24. The petitioner has specifically denied the contentions raised by the respondent in its written statement. It is submitted that neither the show cause notice cause notice nor the 45A order mentions or talks about any such complaint nor the respondent in the show cause notice or in 45A or otherwise claimed that the proceedings were invoked against the petitioner on any such complaint. The petitioner was neither made aware about any such alleged complaint nor any such complaint was supplied to the petitioner. It is submitted that the copy supplied to the petitioner does not accompany any proceedings dated 06.05.2013 or 17.05.2013. It is submitted that the enquiry in the present case pertained to 2008 to March 2012. Alleged unauthenticated bills were neither part of the 45A enquiry nor the petitioner was confronted with the same during 45A enquiry.
Neither the 45A authority took cognizance of alleged documents nor gave any findings thereon nor made the alleged documents as basis of its impugned order. Alleged bills are denied. Intimation and evidence with respect to employees receiving wages beyond the prescribed wage ceiling was already existing with the respondent. Neither any alleged list was supplied to the petitioner nor alleged list formed part of 45A proceedings. Alleged non deposit on the part of the petitioner is specifically denied. Issues
25. On the basis of the pleadings, the following issues were framed by the Learned Predecessor of the Court on 10.11.2014:
ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC Page No. 13 of 28 Digitally signed SUSHEEL by SUSHEEL BALA DAGAR BALA Date:
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(1) Whether the impugned order dated 14.08.2013 and demand
of Rs. 9,68,178/ is liable to be set aside? OPP (2) Relief Petitioner's Evidence
26. In support of its case, the petitioner examined its proprietor Shri O.P. Tiwari as PW1, who tendered his evidence by way of affidavit Ex. PW 1/A and relied upon the following documents:
(a) Photocopy of observation slips as Ex. PW1/1.
(b) Photocopy of departmental instructions as Ex. PW1/2.
(c) Photocopy of inspection note dated 20.02.2013 as Ex. PW1/3.
(d) Photocopy of observation slip regarding the aforesaid inspection dated 20.02.2013 as Ex. PW1/4.
(e) Photocopy of C18 as Ex. PW1/5. (f) Photocopy of order dated 14.08.2013 as Ex. PW1/6. (g) Photocopy of contribution history for the month of September 2012 as Ex. PW1/7. (h) Photocopy of ESI returns for the period April 2008 to September 2011 as Ex. PW1/8. (i) Photocopy of register under regulation 32 as Ex. PW1/9.
After crossexamination, the petitioner evidence was closed. Respondents' Evidence
27. In support of their defence the respondent examined three witnesses. Shri Gaurav Kansal as RW1, tendered his evidence by way of affidavit Ex. RW1/A and relied upon the following documents: ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC Page No. 14 of 28 Digitally signed by SUSHEEL SUSHEEL BALA DAGAR BALA Date:
2022.03.26 DAGAR 18:09:33 +0530
(i) Copy of letter dated 27.08.2012 as Ex. RW1/1.
(ii) Copy of complaint dated 29.07.2012 as Mark A.
(iii) Copy of complaint dated 25.09.2012 as Mark B.
(iv) Copy of contract dated 01.04.2012 as Mark C.
(v) Copy of the register dated 26.09.2012 as Mark D.
(vi) Visit note as Ex. RW1/2.
RW2 Shri Anil Kumar, Deputy Director, ESI Corporation, tendered his evidence by way of affidavit Ex.RW2/A. RW3 Shri Khumesh, Authorized Representative of ESI Corporation, tendered his evidence by way of affidavit Ex.RW3/A and relied upon the following documents:
(i) Copy of authorization letter as Mark E.
(ii) Copy of the complaint as already Mark B.
(iii) Copy of the attendance register and salary sheet as Mark D.
(iv) Physical verification report as Mark D. After crossexamination respondent evidence was closed. Final Arguments
28. I have heard Shri Manish Malhotra, Ld. Counsel for the petitioner and Shri V.K.Singh, Ld. Counsel for the respondent and have gone through judicial record. Both parties have also filed written synopsis of their arguments alongwith case laws. Ld. Counsel for the petitioner has relied upon the following case laws in support of his arguments :
ChairmancumM.D. Coal India Ltd. v. Ananta Saha MANU/SC/0364/2011, Nagarjuna Health Care Centre v. Employees ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC Page No. 15 of 28 Digitally signed by SUSHEEL SUSHEEL BALA BALA DAGAR Date: 2022.03.26 DAGAR 18:09:37 +0530 State Insurance Corporation MANU/AP/0091/2018, Sehdev Singh Verma v. J.P.S. Verma MANU/D/2514/2015, Damjibhai L. Shah v. N.M. Gandhi WP No. 2915 of 1987, Dayle De'Souza v. Government of India through Deputy Chief Labour Commissioner (C) Criminal Appeal a/o SLP (Crl.) No. 3913 of 2020, M/s Bliss Refrigeration Pvt. Ltd. v. Naseeb Alam WP (C) 110/2015 decided on 18th September 2015 of the Hon'ble High Court of Delhi, Employee State Insurance Corporation v. Om Prakash FAO No. 401/2002 & CM No. 1079/2002 decided on 13.08.2009 of the Hon'ble High Court of Delhi, Indersons Motors Pvt. Ltd. v. Regional Provident Fund CommissionerII 2013 LLR 631, Employees' State Insurance Corporation , Patna v. Tubex India Pvt. Ltd. 2014 (141) FLR 358, M/s Natraj Cinema v. The Deputy Regional Director Employee State Insurance Corporation First Appeal No. 630 of 2005 decided on 15.07.2017 of the Hon'ble High Court of Bombay, Employees' State Insurance Corporation v. Govt. of NCD of Delhi SLP No. 14644/2009 dated 14.07.2019, Distellaries and Chemical Mazdoor Union Meerut v.
State of U.P. 2005 LLR 46, Kishore Lal v. Chairman Employees' State Insurance Corporation 2007 LLR 740, Shankar Charavarti v. Britannia Biscuit Co. Ltd. MANU/SC/0374/1979, Himachal Pradesh State Forest Corporation v. Regional Provident Fund Commissioner 2008 LLR 980.
Ld. Counsel for the respondent has relied upon the following case laws in support of his arguments :
Zuari Cement Ltd. v. Regional Director ESIC Hyderabad Civil ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC Page No. 16 of 28 Digitally signed by SUSHEEL SUSHEEL BALA DAGAR BALA Date:
2022.03.26 DAGAR 18:09:42 +0530 Appeal No. 513840/2007 decided on 02.07.2015 of the Hon'ble Supreme Court of India Issue wise findings.
Issue no. 1 Whether the impugned order dated 14.08.2013 and demand of Rs. 9,68,178/ is liable to be set aside? OPP
29. The onus to prove this issue is on the petitioner. It is the contention of the petitioner that the two SSOs who conducted the inspection dated 20.02.2013 were not competent to function in the area in which the petitioner establishment was situated. The SSOs were even incompetent as per the inspection policy Ex.PW1/1. It is submitted that the two SSOs were not competent to make inspection of petitioner's record for five years as the said inspection was not authorized by regional director as per inspection policy Ex.PW1/2. It is submitted that instructions in Ex.PW1/2 and ESI General Regulations 102A (ii) has been violated. It is submitted that the observations of the SSOs in observation slip Ex.PW1/4 using words wages and salary difference and then stating the year wise amount are not understandable.
30. It is argued that if it is found that any contribution is payable on particular amount which would have been included in wages, then it should be decided on the spot. Whenever an inspection is done it should be in complete in all aspects and final observation must be recorded properly. After checking the books of account the SSOs has to incorporate all the details in the inspection report. Ld. Counsel for the petitioner has relied upon the case Nagarjuna Healthcare Centre v. ESIC in CMA No.124 of ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC Page No. 17 of 28 Digitally signed SUSHEEL by SUSHEEL BALA BALA DAGAR Date: 2022.03.26 DAGAR 18:09:46 +0530 2007 of the Hon'ble AP High Court dated 16.03.2018 to submit that the inspection of lacking details would not be valid document. It is submitted that the show cause notice Ex.PW1/5 is vague and section 45A should not have been invoked. There is no information of failure on the part of the employer to pay due contribution for the period for which the aforesaid returns were to be submitted or particulars were to be furnished or record/registers were to be maintained.
31. It is contended that the number of employees, number of months and rate of monthly wages are not mentioned by Section 45A authority despite the same being essential for calculation of proposed contribution. It is argued that there is lack of application of mind as reasonable opportunity was not granted to the petitioner. Reference is made to the definition of employee U/s 2(9) of the ESI Act to submit that it does not included within the meaning of employee any person so employed whose wages exceed a month. The authority preferred to omit mentioning of rate of monthly wages employees and number of employees concerning whom the basis for calculation related. The petitioner was not informed about the contents of the alleged inspection report and the basis to state that there were omitted wages for period from 2008 to 2012. Section 45A Authority lacked jurisdiction. The returns were already submitted by the petitioner as required under regulation 26.
32. Thus, from the above version of the petitioner it is clear that the petitioner is taking technical grounds to submit that the impugned order is to be set aside.
ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC Page No. 18 of 28
Digitally signed
SUSHEEL by SUSHEEL
BALA BALA DAGAR
Date: 2022.03.26
DAGAR 18:09:51 +0530
33. On the contrary, it is the case of the respondent that the respondent corporation have received a complaint on 29th July 2012 from the workers of the petitioners, working at Maharaja Agrasen Hospital at Punjabi Bagh, Delhi that to the petitioner firm was deducting the contribution from their employees but not issued the ESI Card and thus they were unable to avail the benefit under the ESI Scheme. After receiving the said complaint, the Assistant Director (Hqrs.) New Delhi, forwarded the said complaint to the Regional Director, regional Office, New Delhi vide letter dated 27/08/2012 the said letter is marked as Mark A. Another complaint MarkB was received from the employee of the petitioner namely Sh. Satinder Kumar regarding the same issues.
34. Thereafter the regional Director deployed the SSO to verify the facts and truth of the Complaint. The SSO physically visited the Maharaja Agrasen Hospital and found that out of 37 Guards employed by the petitioner, only 22 guards were availing the benefit of the ESI Scheme and were having the ESI Card. Although the petitioner was deducting their ESI contribution but did not pay to the respondent and thus they were not able to get the benefits under the scheme. During the verification, the SSO Sh. Gaurav Kansal requested the petitioner to supply the copy of contract with Maharaja Agrasen Hospital but the petitioner refused to provide the same. Thereafter the copy of Contract was provided by the Maharaja Agrasen Hospital to the respondent after receiving a letter dated 19/10/2012 MarkC from the Respondent.
35. Another SSO Sh. Kumesh and Sh. O.P. Dhawan were deployed by ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC Page No. 19 of 28 Digitally signed SUSHEEL by SUSHEEL BALA DAGAR BALA Date:
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the Regional Director, New Delhi, to verify how many actual employees of the petitioner are working and how many employees of the petitioner were shown on his register. After verification, Sh. Kumesh And Sh. O.P. Dhawan found that the petitioner had mentioned only the name of 31 employees in his register but actually there were 46 guards working as guards in Hospital and thus the said team mentioned their name from Serial No. 32 to 46 in the presence of Sh. R.K. Singh who is the manager of the Petitioner's Firm. The said Sh. R.K. Singh has signed and acknowledged the said employees in the said register MarkD on 26/09/2012 during the physical verification. The petitioner employees also filed an RTI to know that what action has been taken by the respondent on the complaint made by them.
36. The Regional Director deployed Mr. Gaurav Kansal and Mr. A.K. Gautam for the purpose of inspection of the record. They visited the petitioner unit on 01/02/2013, 06/02/2013 and 20/02/2013 but the petitioner did not produce the entire documents and particularly did not produce the Record of Salary Register, Attendance Register, Work Orders, Bills and voucher etc. Both the SSO's had prepared their visit note and Inspection Observation Slip in the presence of the petitioner. The copy of the same is exhibited as RW1/1.
37. The respondent Regional Director had deputed 34 teams (internal team for the purpose of verification from the clients of the petitioner). They had verified that the petitioner had showed certain employees in his register as exempted employees from the ESIC but actually they were ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC Page No. 20 of 28 Digitally signed by SUSHEEL SUSHEEL BALA DAGAR BALA Date:
2022.03.26 DAGAR 18:09:59 +0530 coverable employees under the Act. Thereafter C18 was issued and personal appearance was also given to the petitioner to present his case and to produce the documents but despite of availing several opportunities, the petitioner has failed to produce the documents and hence an order under section under 45A of ESI Act was passed. The petitioner also did not challenge the order under section 45A of the ESI Act before the appellate Authority under section 45AA of the ESI Act and directly approached the under Section 75 of the ESI Act.
38. RW1 has relied upon the following documents : letter / complaint dated 25.09.2012, letter dated 16.08.2012 by Shri Mukul Vats, List of security guards, deposit of PF and ESI contribution by Shri O.P. Tiwari, ID card of Shri Pankaj Kumar, application of allotment ESI Code number dated 09.01.1988, show cause notice dated 23.02.1995, list of salary of employees, C18, inspection report 20.02.2013, contribution of payment 01.10.2011 to 30.11.2012, complaint against petitioner dated 05.11.2012, survey report 29.03.1996, C18 adhoc 27.02.2007 physical survey 16.10.2012, complaint against petitioner dated 20.11.2012, physical verification dated 26.09.2012, night shift employee list dated 25.09.2012, attendance register in month of September, C18 adhoc registered AD dated 03.04.2013, history sheet for prosecution action dated 15.01.2013, letter to produce documents dated 25.01.2013, notice of inspection of record dated 25.01.2013, notice for inspection of record dated 06.02.2013, complaint dated 31.10.2012, respect of physical verification of employee dated 18.10.2012, RTI copy dated 20.11.2013, compliance order EPF M.P. ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC Page No. 21 of 28 Digitally signed SUSHEEL by SUSHEEL BALA DAGAR BALA Date:
DAGAR 2022.03.26
18:10:04 +0530
Act dated 10.11.2009, copy of information dated 19.11.2013 to the department about RTI of Shri Hari Shankar, Shri Satendra Kumar letter of ESIC card dated 29.07.2012, agreement for security service 01.04.2012, non production of record dated 19.02.2013 06.02.2013, coverage of ESI dated 28.04.1989, letter for next dated 01.02.2013, authority letter dated 06.05.2013, order u/s 45A of ESIC Act dated 14.08.2013, C18 adhoc dated 03.04.2013, letter dated 24.09.2012 dated 24.09.2012, show cause notice dated 21.12.2012, adjournment letter dated 06.02.2013.
39. The above documents show that the technical objections being raised by the petitioner are not tenable as seen from the above documents.
40. Perusal of the record shows that the petitioner has only examined one witness and PW1 deposed as under:
"It is true that Petitioner deployed the guards at Maharaja Agrasen Hospital. I cannot tell exactly how many guards were deployed at Maharaja Agrasen Hospital in the year 2012 but the average thereof maybe 28 to 30. All the employees were provided ESI facility as per their working. I do not know whether any physical verification was conducted by the Corporation in the said Hospital. Records of all the employees including the guards deployed at Maharaja Agrasen Hospital used to be maintained by the Petitioner. I cannot tell whether serial No 32 to 46 were not mentioned for the ESIC contribution of the deployed guard. I cannot tell whether the Petitioner received the Show Cause Notice dated 211212 to produce the relevant record as the Corporation asked for. Vol. I have been suffering from severe ailments since the year 2010 and suffering from ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC Page No. 22 of 28 Digitally signed by SUSHEEL SUSHEEL BALA DAGAR BALA Date:
2022.03.26 DAGAR 18:10:09 +0530 short of memory including other ailments of blindness of one eye etc. and not attending my office regularly since then. I do not know whether Petitioner received notice dated 060513 to produce the record."
41. From the above version of PW1 it is clear that PW1 was not aware about the show cause notice, demand notice, production of documents etc. Either he had no knowledge about the matter or he was feigning ignorance for reasons best known to him. He admitted that Sh.Ram Kishore participated in the personal hearing dated 17.05.2013. Thus from the version of the PW1 itself it is clear that opportunity of hearing as well as production of records was duly given to the petitioner. It is also clear that notice was duly served on the petitioner due to which, the said Ram Kishore appeared on behalf of the petitioner. In the case of Regional Director ESIC v. Girdhari Lal & Sons, 208 (2014) DLT 718 referring to Section 106 of Indian Evidence Act, the Hon'ble High Court of Delhi held that: "The provision of Section 75 of the Act makes it clear that proceedings initiated thereunder by the assessee are in the nature of original proceedings in which pleadings are completed and evidence is led because the assessee challenges the coverage and assessment on various grounds. The ESI Court therefore takes a decision on merits and remand is ordered only if there is a positive finding by the ESI Court that no notice was served for coverage and assessment i.e. no notice was served before assessing the assessee.
ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC Page No. 23 of 28 Digitally signed by SUSHEEL SUSHEEL BALA DAGAR BALA Date: 2022.03.26 DAGAR 18:10:14 +0530
42. In the present case it was for the petitioner to prove that the employees who were not covered by the petitioner were getting monthly wages beyond the ceiling limit of the corporation. Further, the fact or evidence of terms of contract, service or employment or whether the workers are getting payment within or beyond the ceiling limit is within the domain and knowledge of the petitioner and it was for the petitioner to prove the same. Section 106 of the Indian Evidence Act, 1872 reads thus:
"106. Burden of proving fact especially within knowledge When any fact is especially within the knowledge of any person, the burden of proving that fact is upon him.
Illustrations
(a) when a person does an act with some intention other than that which the character and circumstances of the act suggest, the burden of proving that intention is upon him
(b) A is charged with traveling on a railway without a ticket. The burden of proving that he had a ticket is on him."
43. The petitioner chose not to examine any of the employees to corroborate or support its testimony nor did it choose to examine the said Ram Kishore who appeared before the authorities for personal hearing and signed on the register dated 26.09.2012 MarkD. Thus, the best evidence has not been produced by the petitioner. At this juncture, it is important to refer to the observations made by the Hon'ble Apex Court in Fertilisers and Chemicals Travancore Limited v. Regional Director, ESIC and others, Civil Appeal No. 917918 of 2004 wherein it was held that ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC PageDigitally No. 24signed of 28 by SUSHEEL SUSHEEL BALA DAGAR BALA Date:
2022.03.26 DAGAR 18:10:18 +0530 wherever any petition is filed under Section 75 of the Act, the employer has not only to implead the ESIC but also to include at least some of the workers concerned (in the representative capacity if there are large number of workers) or the trade union representing the said workers. It was observed that the workmen or their trade union have to be necessarily made a party because the Act is a labour legislation made for the benefit of the workmen. The relevant extract of the judgment is reproduced below:
"6. Labour Statutes are meant for the benefit of the workmen. Hence, ordinarily in all cases under labour statutes the workmen, or at least some of them in a representative capacity, or the tradeunion representing the concerned workmen must be made a party. Hence, in our opinion the appellant (petitioner before the Employees Insurance Court) should have impleaded atleast some of the persons concerned, as respondents...
...11. In our opinion, wherever any petition is filed by an employer under Section 75 of the Act, the employer has not only to implead the ESIC but has also to implead atleast some of the workers concerned (in a representative capacity if there are a large number of workers) or the tradeunion representing the said workers. If that is not done, and a decision is given in favour of the employer, the same will be in violation of the rules of natural justice. After all, the real concerned parties in labour matters are the employer and the workers. The ESI Corporation will not be in any way affected if the demand notice sent by it under Section 45A/45B is quashed."
ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC Page No. 25 of 28 Digitally signed by SUSHEEL SUSHEEL BALA DAGAR BALA Date: 2022.03.26 DAGAR 18:10:23 +0530
44. In the present case, the petitioner did not implead any of the workers/employees for the reasons best known to him. In terms of the observations of the Hon'ble Apex Court, it was mandatory for the petitioner to implead the workers. The employees were necessary parties for the decision of the present petition under section 75 of the ESIC Act but the petitioner has chosen not to do so. Hence the present petition is liable to be dismissed on this ground alone of nonjoinder of necessary parties.
45. Further, Section 106 of the Evidence Act 1872 states that onus of proof with respect to facts which are in the knowledge of a person is on the said person. In the present case, the knowledge of number of employees who were within the ceiling limit of the Act and those who were beyond is in the special knowledge of the respondent and this onus has to be discharged by filing the record of employees of the respondent of the number of employees which the respondent has in its establishment. Admittedly, no record was filed by the respondent in the Court to substantiate its contention that other employees were beyond the ceiling limit of coverage under the ESIC Act. Accordingly, the respondent has failed to discharge the onus upon it that the employees to whom the petitioner was making payment were getting wages beyond the ceiling limit and therefore, those employees could not be covered under the ESI Act.
46. The respondent being the petitioner in the original proceedings under Section 75 of the Act had to discharge the onus upon it to file the record with respect to its number of employees within the ceiling limit and those who were beyond the ceiling limit which it failed to do.
ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC Page No. 26 of 28
Digitally signed
SUSHEEL by SUSHEEL
BALA BALA DAGAR
Date: 2022.03.26
DAGAR 18:10:28 +0530
47. In order to prove its defence, the respondent have produced three witness who have fully supported the case of the respondent and also proved that the respondent has given the opportunity to the petitioner to be heard and to produce the documents. The petitioner has challenged the order under section 45A of the ESI Act without approaching the Appellate authority under section 45AA of the ESI Act. The petitioner has failed to comply the mandatory provision to initiate the petition under section 75 of ESI Act as per the directions of the Hon'ble Supreme Court in Fertilizers & Chemicals v. Regional Director ESIC(supra) to make party some of the employees whose benefit is under challenge. The petitioner has failed to produce any documents or evidence before the Court or before the respondent to show that the designation of its employees who were allegedly drawing wages beyond the wage ceiling prescribed under the ESI Act. The petitioner has duly signed and acknowledged the observation slip Ex.PW1/4 during the inspection without any dispute note or remark and now petitioner cannot be allowed to dispute the same. The petitioner has deducted the ESI contribution of their employees from their wages deployed at their clients place but has not paid the same to the respondent. The said deduction of ESI contribution continued even after 2012 and against the name of the employees namely Shivaji Sharma, Brij Kishore Pathak, Pawan and Tribhuwan Tiwari by the respondent who claimed the contribution from its client Maharaja Agrasen Hospital but did not deposit the same with ESIC. In view of the above, there is no ground for setting aside the order dated 14.08.2013 and the demand raised by the respondent.
ESIC No. 4/16 M/s Bravo Action Security Services v. ESIC Page No. 27 of 28
Digitally signed
SUSHEEL by SUSHEEL
BALA BALA DAGAR
Date: 2022.03.26
DAGAR 18:10:33 +0530
Hence, issue no.1 is decided against the petitioner and in favour of the respondent.
RELIEF
48. In view of the above discussions, the Court is of the view that the order of the Appellate Authority dated 14.08.2013 is detailed, well reasoned and does not call for any interference. It is accordingly upheld. The petitioner is not able to prove its case. The present petition does not deserve to be allowed and is hereby dismissed. No order as to costs. Decree sheet be prepared accordingly.
File be consigned to record room.
Digitally signed SUSHEEL by SUSHEEL
BALA DAGAR
BALA Date:
DAGAR 2022.03.26
18:10:39 +0530
Announced in open Court (Susheel Bala Dagar)
on 26th Day of March 2022 SCJcumRC (West)
Tis Hazari Courts, Delhi.
(This judgment contains 28 pages.)
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